UNITED
NATIONS,
February 6 --
The US
government's
ongoing
corporate
bailout
following the
2008 meltdown
triggered by
predatory
lending
continues to
reverberate in
one of the
largest
proposed
mergers of
2014 now into
2015.

Now on
February 6, a
public hearing
has been
announced:

"The
Federal
Reserve Board
and the Office
of the
Comptroller of
the Currency
(OCC) on
Friday
announced a
joint public
meeting on the
proposal for
CIT Group,
Inc.,
Livingston,
New Jersey, to
acquire IMB
Holdco and its
subsidiary,
OneWest Bank,
National
Association,
both of
Pasadena,
California.
The proposal
also includes
the merger of
CIT Bank into
OneWest Bank.

"The purpose
of the meeting
is to collect
information
relating to
the
convenience
and needs of
the
communities to
be served,
including a
review of the
insured
depository
institutions’
performance
under the
Community
Reinvestment
Act. The
agencies also
will consider
and collect
information on
other factors
in making a
decision on
the
application,
including the
effects of the
proposal on
the stability
of the U.S.
banking or
financial
system, the
financial and
managerial
resources and
future
prospects of
the companies
and banks
involved in
the proposal,
and
competition in
the relevant
markets.

The public
meeting will
be held at the
Los Angeles
Branch of the
Federal
Reserve Bank
of San
Francisco, 950
South Grand
Avenue, Los
Angeles,
California, on
Thursday,
February 26,
2015,
beginning at
8:00 a.m.
PST."

On December
22, pressing
for approval
of its
application to
acquire
OneWest, CIT
told the
Federal
Reserve, "CITB
and OWB are
not yet able
to provide
specific
details about
the expanded
Community
Reinvestment
Act portfolio
because this
will be based,
in part, on
input from
CITBNA’s
to-be-formed
Community
Development
Advisory Board
following the
closing of the
Transaction."

As Inner City
Press / Fair
Finance Watch
said at the
time, that's
basically
saying,
approve our
merger (on
which the Fed
is required to
consider CRA),
and THEN we'll
tell you about
CRA.

Meanwhile,
on the
long-pending
application by
M&T to
acquire
Hudson, Inner
City Press /
Fair Finance
Watch on
February 5
submitted into
the record before
the Fed the
complaint
filed in the
US District
Court for the
Southern
District of
New York
charging
M&T with
discrimination
in lending,
adding "It is
unreasonable
and
inappropriate
for the
Federal
Reserve System
to ignore or
refuse to
receive into
the record all
information
since the
comment period
close so long
ago." We'll
see.

The
CIT - OneWest
context: here
is an email
that OneWest
CEO Joseph
Otting sent to
Wall Street
and other
financiers, to
lobby the Fed,
h/t
CRC:

We were
excited to
announce on
July 21, 2014,
that IMB
HoldCo LLC,
the parent
company of
OneWest Bank
entered into a
merger
agreement with
CIT Group Inc.
As part of the
applications
for regulatory
approval of
the
transaction,
our regulators
are interested
in the
perspectives
of the public.
We are writing
you to seek
your support
of the Bank
and pending
merger. This
merger, if
approved,
would create
the largest
bank
headquartered
in Southern
California
with a full
suite of
banking
products and
services,
which will
allow us to
better serve
our customers.
We would
retain and
grow jobs and
are committed
to continuing
and expanding
our efforts to
serve the
economic and
development
needs of our
community. I
would like to
ask you to
take a moment
to click on
the link below
and submit a
letter of
support adding
any of your
own words or
thoughts.

Please submit
your letter by
clicking here,
or by visiting
our website at
www.OneWestBank.com/merger-support
(if the link
isn't
clickable or
part of the
link is cut
off, please
copy and paste
the entire URL
into your
browser's
address bar
and press
Enter)

Thank you for
your
support.
Best wishes
for a
successful
2015 and
please call on
me if I can
ever be of
assistance.

Now Inner City
Press / Fair
Finance Watch,
along it's
sure with the
California
Reinvestment
Coalition,
has submitted
this to the
Fed demanding
that public
hearing in
fact be held,
after what an
independent
bank
consultant told
Bloomberg News
is "unusual"
outreach to
Wall Street
contacts by
OneWest.
What will the
Fed do?

The Fed had
asked CIT to
"provide the
final version
of the
document 'CIT
Bank N.A.
Community
Reinvestment
Act Plan,' the
draft of which
was included
as Annex C to
the letter
responding to
the public
comments
submitted to
the Federal
Reserve Bank
of New York."

One question
is, will the
Federal
Reserve Board
in this case
and in others
coming up, and
fast, require
the actual
submission for
CRA plans and
allow for
public comment
on them?

On
December 18
CIT gave the
Fed statements
from the FDIC,
in essence not
to worry about
the Loss Share
Agreements
OneWest has
won from the
FDIC:

"OWB
acquired
assets from
three failed
banks —
IndyMac
Federal Bank,
FSB ('IMFB'),
First Federal
Bank of
California,
and La Jolla
Bank, FSB (the
'Failed
Banks'). The
FDIC entered
into
Shared-Loss
Agreements
with OWB in
these
acquisitions
with respect
to certain of
the acquired
assets."

Now the
regulators
say, don't
worry as CIT
seeks to take
these
loss-shares
over, although
their value
will not for
now be
disclosed:

“The
FDIC's
Division of
Resolutions
and
Receiverships
does not
release
shared-loss
payment
information on
individual
acquirers or
assets because
those records
often contain
material,
non-public
information,
and their
release could
harm the
negotiating
posture of the
acquirer with
respect to a
particular
borrower or
asset, thereby
potentially
increasing the
amount of a
covered loss
to the FDIC.”

This is called
stonewalling,
or a cover-up.
We'll have
more on this.

* * *

Back on
November 17,
four days
before a rare
Senate hearing
on the
regulatory
capture of the
Federal
Reserve, the
Federal
Reserve Bank
of New York
posed a series
of questions
to CIT Group,
trying to buy
OneWest.

CIT provided
Inner City
Press with a
copy of its
answer to the
Fed's November
17 questions
(answers to
the Fed's
November 25
questions have
not yet been
provided.)

CIT says
"OneWest has
discussed the
Transaction
with staff of
each of
FannieMae and
FreddieMac
(the 'GSEs')
and will be
filing an
application in
connection
with the
change of
control of OWB
in order for
OWB to
continue as a
seller/servicer
for the
respective
GSE. OneWest
is now in the
process of
preparing the
appropriate
applications,
which it
expects to
submit as soon
as possible,
and no later
than
year-end."

But will
OneWest
provide notice
of these
applications
to the GSEs to
the groups
which have
timely
protested its
applications
to the Fed and
OCC? The OCC
heard much
about OneWest,
and CIT, at a
December 2
EGRPRA hearing
in Los
Angeles. Why
not just hold
public
hearings on
this proposed
mega-merger?
And on another
one, announced
but not yet
applied for?

On
November 21,
Federal
Reserve Bank
of New York
President
Dudley
described anti
revolving door
safeguards and
a desire for
"good culture"
at banks.

Good culture?
How then did
the predatory
lending
meltdown take
place? And
anti-revolving
door? How can
it be, then,
that a former
Federal
Reserve Legal
Division
supervisor is
writing for
BB&T's
deals to those
who used to
work under
her?

As soon as
Dudley left
the stand, a
more serious
anti revolving
door
protection was
proposed.

Dudley was
asked about
Goldman Sachs'
warehouses,
and JPM
Chase's abuse
of the energy
markets, but
didn't
directly
answer.
Since then he
has toured The
Bronx - we'll
see what if
any difference
it makes.

The Fed on
November 17
asked for
answers to
four questions
it sent to the
CIT Group,
with a copy to
Inner City
Press.

Inner City
Press and
others have
challenged
CIT's
application to
acquire
OneWest; as
previously set
forth below,
Inner City
Press / Fair
Finance Watch
has been
challenging
BB&T, showing
the
disparities in
BB&T's
lending
record.

On BB&T's
application to
acquire 41
branches in
Texas from
Citibank, Fair
Finance Watch
showed the
FDIC for
example that
for
conventional
home purchase
loans in the
Houston
Metropolitan
Statistical
Area in 2013,
BB&T made
65 such loans
to whites, and
NONE to
African
Americans.

The
FDIC's Acting
Deputy
Regional
Director for
Compliance
replied that
"the FDIC
deems your
correspondence
to constitute
a protest."

BB&T
through law
firm Wachtell,
Lipton, Rosen
& Katz
submitted a
response which
admitted that
in Houston
“the
percentage of
Mortgage Loans
made to low
and moderate
income
borrowers
during the
first six
months of 2014
was also below
the 2013
aggregate
industry
average.”
BB&T
Response at
Page 11, which
also notes at
10 that at
least one of
the Citibank
branches
BB&T seeks
to acquire, it
would shutter.

And so on
November 10
Fair Finance
Watch
submitted more
extensive
comment
opposing
BB&T's
application to
acquire Bank
of Kentucky,
including that
bank's
disparities in
the Cincinnati
regional area
and BB&T's
in the
Louisville
MSA, where in
2013 BB&T
made 229
conventional
home purchase
loans to
whites, and
only 12 to
African
Americans and
only six to
Latinos, while
denying 41.7%
of
applications
from Latinos
versus only
17.5 of
application
from whites, a
disparity of
2.38 to 1.

How
will the Fed's
precedent(s)
on CIT -
OneWest be
applied?

The secret
recordings of
then
Federal
Reserve
examiner
Carmen Segarra
about Goldman
Sachs and
regulatory
capture have
given rise to
calls for
oversight
hearings by at
least two US
Senators.
Their hearing
will now occur
on November
21. Relatedly,
BB&T's
response from
the law firm
of Wachtell,
Lipton, Rosen
& Katz is
penned by a
former Federal
Reserve Board
Legal Division
supervisor.

First, how
could such
information be
withheld for a
bank seeking
to become Too
Big To Fail?

Second, how
could the
Federal
Reserve insist
that the
comment period
is closed,
while
information
that was
improperly
withheld is
belatedly
released?

On October 10,
Inner City
Press was sent
heavily
redacted
copies of two
letters from
the CIT Group
concerning its
proposed
acquisition of
OneWest to the
Federal
Reserve Bank
of New York,
supposedly in
compliance
with the
Freedom of
Information
Act - now uploaded
to Scribd here
and here.

On October 18,
Inner City
Press &
Fair Finance
Watch
challenged
these
redactions
under FOIA,
and
submitted
comments on
CIT's mockery
of the
Community
Reinvestment
Act to both
the Federal
Reserve and
the Office of
the
Comptroller of
the Currency.

CIT sought to
withhold even
its CRA plan.
Inner City
Press raised
the issue to
Fed Chair
Yellen in
Washington -
and on October
15, the
Federal
Reserve called
Inner City
Press and left
a voice mail
to say its
request for
extension of
the comment
period,
because of the
incorrectly
withheld CIT
documents, has
been granted
until October
22.

While
appreciating
the Fed's
comment period
extension, the
context and
public policy
questions
recently
raised must be
noted.

For now, on
October 18
Inner City
Press &
Fair Finance
Watch
submitted a
fourth timely
comment to the
Fed,
critiquing the
belatedly
released CRA
Plan, and
demanding
release of
still -
withheld
information:

The CIT CRA
Plan which CIT
improperly
withheld
states, in
Section III,
that “the Bank
has lending
and support
operations
primarily
located in
Florida, New
York and New
Jersey” --
then states
its CRA
Program is in
Salt Lake
City, Utah and
“the western
United
States.”

This is
makes a
mockery of
CRA,
explicitly
separating the
bank's lending
operations
from its “CRA”
operations.

In
Section IV,
CIT makes
claims about
outreach and
“public
participation”
in its CRA
Plan - but in
outreach and
participation
excluded the
communities in
which CIT has
its lending
operations
(FLA, NY and
NJ) and from
which, on
information
and belief, it
collects
insured
deposits.

This is
makes a
mockery of
CRA,
explicitly
separating the
bank's deposit
taking from
its “CRA”
operations and
outreach. See
limited list
of contacts in
Appendix C,
and proof of
publication in
(only) the
Salt Lake
Tribute and
Deseret News.

Even in
its artificial
limited
assessment
area, CIT's
“New CRA
Assets” are
less than 1%
of its Assets.

While
still
improper, the
above provide
a motive for
CIT's attempt
to withhold
its CRA Plan
from the
public...

As to CIT's
October 8
letter, ICP
has already
timely
commented
“there is also
the question
of the
agreement the
FDIC reached
with IndyMac /
OneWest, and
whether
wannabe SIFI
CIT would
assume it, as
a windfall.
These are
important
questions
militating for
both the
required
extension of
the comment
period, and
for public
hearings.”

In the
October 8
letter, CIT
begins a
sentence on
page 3
“Clawback
provisions
exist for the
First Fed and
La Jolla
portfolios
[REDACTED.]”
CIT also
redacts, on
page 6,
information
related to the
OnWest /
IndyMac
Consent Order;
HAMP (Page 7);
deposits
collected over
the Internet
(Page 8);
Lending (Page
9); Governance
and Risk
Management
(page 10-12);
and Resolution
Plan (Page
12). CIT also
heavily
redacts what
it calls
“confidential
questions”
(pages 14-16),
and exhibits.
This
information
must be
released, and
the comment
period
extended.
In an
abundance of
caution, ICP
has submitted
a FOIA request
to this
effect.

The Fed's
secrecy is
endemic.
The head of
the FRBNY
since 2009,
William
Dudley, has
insisted that
supervision by
the Fed and
its regional
banks is
"completely in
the public
interest." He
cites, in
support of
this,
something he
calls
"horizontal"
supervision,
which to many
has the
context of
being supine.

And the
Federal
Reserve Banks
are, in fact,
owned by the
banks they
ostensibly
regulate. And
as Inner City
Press has
previously
reported,
while merger
applications
go in the
first instance
to the Federal
Reserve Bank,
they have only
the power to
approve, not
deny or even
impose
conditions,
the
applications.

Horizontal,
indeed.

This
horizontal
position is
the rule, not
the exception.
Inner City
Press
routinely
submits
Freedom of
Information
Act requests
for
communication
between the
Fed and banks
applying for
mergers.

Most
recently, the
Fed has
extended its
deadline for
responding to
Inner City
Press' request
on CIT
- OneWest,
on which it
purported to
close its
public comment
period on
September 24:

FOIA
Request No.
F-2014-00380

Dear
Mr. Lee,

On
August 27,
2014, the
Board of
Governors
("Board")
received your
electronic
message dated
August 26,
pursuant to
the Freedom of
Information
Act ("FOIA"),
5 U.S.C. §
552... On
August 28,
2014, the
Board’s
Freedom of
Information
Office made an
interim
production of
responsive
documents
consisting of
the public
portion of the
application by
CIT Group Inc.
and Carbon
Merger Sub LLC
to acquire and
merge with IMB
HoldCo LLC,
and thereby
indirectly
acquire voting
shares of
OneWest
Bank...
Pursuant to
section
(a)(6)(B)(i)
of the FOIA,
we are
extending the
period for our
response until
October 9,
2014, in order
to consult
with two or
more
components of
the Board
having a
substantial
interest in
the
determination
of the
request. If a
determination
can be made
before October
9, 2014, we
will respond
to you
promptly.

How
can the public
be shut out
before it has
the basic
information it
has requested?
Now, only
because CIT
mis-published
public notice,
the Fed's
comment period
has been
extended to
October 10. (A
new Office of
the
Comptroller of
the Currency
comment period
has opened,
through
October 24.)

Tellingly,
when
lawyers leave
the Federal
Reserve's
Legal
Division, many
go to white
shoe law firms
that submit
bank merger
applications
to the same
people they
until recently
worked with or
supervised.

Inner City
Press,
Bronx-based
Fair Finance
Watch and NCRC
have
repeatedly raised
this to the
Fed,
without
meaningful
response.

So
here's hoping
that Carmen
Segarra's
courage, in
secretly
making the
recordings and
then releasing
them, leads to
increased
oversight of
and reform at
the Fed.

The
problem is,
while some in
Congress are
willing to
criticize the
Fed, the real
parties in
interest here
are the
largest banks
and investment
banks in the
country. Who
in Congress
will directly
challenge
those? Watch
this site.